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The Canadian Press

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TORONTO - The Toronto stock market closed slightly higher at the end of a volatile session Wednesday, losing most of the day's gains in the final minutes of trading despite the U.S. Federal Reserve saying that economic activity continues to pick up from the worst downturn since the 1930s.

And the central bank pledged to leave interest rates near zero "for an extended period" to encourage a fragile recovery.

The S&P/TSX composite index, up as much as 162 points during the session, closed 45.3 points higher at 11,071.2.

The Fed added that the housing market also has grown stronger, a key ingredient to a sustained recovery.

"They were slightly more optimistic, saying household spending appears to be expanding," said Benjamin Reitzes, economist at BMO Capital Markets. "Before, they said it appeared to be stabilizing."

"So that's a little more optimistic but other than that there wasn't any meaningful changes."

The latest market gyration reflects investor unease with a market that is still up about 45 per cent since the lows of early March. And investors wonder if economic prospects justify such a jump.

"As far as I'm concerned, it's stagnant to going nowhere and we are really into what I keep seeing and determining in my own mind as nothing more than a gambling market at the present time," said Fred Ketchen, manager of equity trading at Scotia Capital.

"It's a trading market - you buy them then you turn around and sell them out."

The Canadian dollar rose 0.38 of a cent to 94 cents US.

The Toronto stock market was earlier lifted amid stronger reports on the U.S. service sector and employment, which also boosted optimism about the American economy.

TSX gains were led by the base metals sector, up 2.75 per cent, with December copper up 3.7 cents to US$2.993 a pound.

The TSX energy sector advanced 0.57 per cent as the December crude contract on the New York Mercantile Exchange gained 80 cents to US$80.40 a barrel.

In New York, the Dow Jones industrial average rose 30.23 points to 9,802.14.

The Nasdaq composite index dipped 1.8 points to 2,055.52 .